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Why banks and stockbrokers are not ready with UPI Payments for IPO applications?

National Payments Corporation of India provides UPI API to banks. Banks today are using UPI 1.0 version of API.

The lean marking feature (blocking the funds in a bank account) is made available in UPI 2.0 API. As UPI 2.0 API have massive changes over the 1.0 version, the banks require enough time to test the application before they move to UPI 2.0.

The fund transfer limit is increased from Rs 1 lakh per transaction to Rs 2 lakhs in UPI 2.0. This also put banks at higher risk in case something goes wrong.

Unless bank upgrades their system to UPI 2.0, they can't provide their UPI 2.0 enabled bank API to their customers including brokers. So brokers cannot implement UPI 2.0 based payment for IPO until banks provide them the upgraded API's. Once the bank releases the feature, it will take some time for brokers to test and implement it.

Other challenges with the UPI implementation planned for phase 1:

1. Minors cannot apply in an IPO as they can't get UPI even they have their own mobile number.
2. HUF and Karta can only apply in 1 application as in most cases HUF bank account has Karta's phone number.
3. Family members who are using the same phone number in the bank accounts can't apply multiple applications. i.e. Husband and wife have 2 bank accounts but both linked to the same phone number.
4. Multiple applications (5) cannot be applied using the same bank account. This is a common feature used by many applicants who apply on all family members name using one account.

As none of the banks are ready yet, it won't be easy to meet extended phase 1 SEBI imposed timelines.